Page 2: The decision-making process
Businesses need to make decisions for different reasons:
All decisions have some degree of risk involved. For example, choosing the colour of paint for the office walls carries much less risk (and cost) than choosing the site of a new office. Decisions may be strategic, tactical or operational. These relate to levels in the organisation.
An organisation's structure affects how and where decisions are made. In large organisations, a traditional hierarchical structure is typical. Authority for decision-making is concentrated at the higher levels among few staff. Each level of management possesses different levels of authority - directors decide strategy; managers decide how to achieve the strategy, i.e. make tactical decisions; employees carry out instructions. A matrix structure, using people with different skills and abilities in project-based teams, allows more freedom and speed of decision-making.
RWE npower's corporate values link the way it carries out its business to its strategic objectives:
Its culture of trust in its people and its emphasis on forward-thinking allow RWE npower to delegate decision-making to all levels through the organisation. This means that young, developing staff are encouraged to use their talents and abilities to deliver the desired performance and customer focus. This benefits RWE npower as it utilises all employees in both decision-making and how the business operates. Each decision relates to business objectives. RWE npower's objectives focus on reliability and consistency of energy supply. If industrial customers requiring combined heat and power (CHP) to meet their process demands lose supply, production may be affected. Spare parts are vital to sustain energy supply. npower Cogen maintains a stock of spare parts. The questions needing to be asked were: are they the correct spares when considered against availability loss? When considering the cost of spare holdings, is the value of stock right?
Jay needed to make decisions based on an assessment of the risks linked to making changes or not doing anything at all. He had to evaluate which Cogen spare parts were 'critical' and what was the best way of managing the supply of these.
Jay's work involved:
- looking at the range of Cogen parts kept in stock
- assessing the costs of maintaining and re-ordering this stock
- comparing these costs to the costs of breakdown and loss of supply.
The project required him to use a wide range of skills including gathering and analysing data, listening to stakeholders, managing his and other people's time and budgets, and communicating with engineers and senior managers in preparing and presenting his findings.